Question
Bernice decided to start business of fashion garments under the name of Designer Wear Co. from April 01, 2023. She inherited $1,000,000. She invested $300,000
Bernice decided to start business of fashion garments under the name of Designer Wear Co. from April 01, 2023. She inherited $1,000,000. She invested $300,000 out of her inheritance and borrowed $300,000 from Bank of Montreal. She purchased a commercial space of 500 sq. feet for $500,000. The space so purchased was suitably renovated to make it ready as showroom. She purchased furniture and fixtures for $75,000. Total amount of bank loan is to be repaid in 20 quarterly instalments beginning June 30, 2023. Annual rate of interest is 12% p.a.
Repayment Schedule of Bank Loan in the first year is as follows:
Due Date | Principal ($) | Interest ($) | Instalment ($) |
June 30, 2023 | 15,000 | 9,000 | 24,000 |
September 30, 2023 | 15,000 | 8,550 | 23,550 |
December 31, 2023 | 15,000 | 8,100 | 23,100 |
March 31, 2024 | 15,000 | 7,650 | 22,650 |
She started business on April 01, 2022 getting it registered under Goods and Services Tax (GST). In view of further capital requirement, she further invested $200,000 in her business. She deposited Security Deposits of $5,000 for the electricity connection and $2,000 for the telephone connection. Furniture for $10,000 was purchased further.
All payments were made in cash. At the end of the year, her results showed the following:
$
Total Sales 2,000,000
Total Purchases 1,700,000
Electricity Expenses 40,000
Telephone Charges 50,000
Freight expenses 60,000
Travelling expenses 45,000
Business promotion expenses 5,000
Maintenance expenses 25,000
Miscellaneous Expenses 15,000
Electricity Expenses Payable 20,000
She withdrew $5,000 by cash each month for her personal expenses.
Bank loan installments were paid regularly.
Journalize the above transactions in the books of Designer Wear Co., post them into the Ledger and prepare the Trial Balance
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